Businessman 'jailed' by workers in China

Dan Levin

BEIJING: An American business executive being held hostage by employees at his medical supply plant in Beijing spent a fifth day on Tuesday in a surreal standoff that has highlighted the dearth of legal protections in China for foreign investors and workers.

On Tuesday afternoon, the executive, Chip Starnes, 42, a founder and president of Specialty Medical Supplies, was kept out of sight, with local government officials insisting that he was merely busy with his lawyers in negotiations.

"He is completely free within the factory; it's just that he has stuff to do," said Chu Lixiang, an official with the government-run labor union in Huairou, a district of Beijing.

The dispute, which has drawn a throng of police officers, Chinese reporters and US diplomats to the factory in Huairou, began when the company, which is based in Coral Springs, Florida, and manufactures medical goods like lancets and insulin syringes, closed its injection molding division and gave roughly 30 employees what Mr Starnes described in a telephone interview Tuesday night as a generous severance package. But rumors soon spread that Mr Starnes was planning to close the entire plant and flee without paying the rest of the workforce, which happens often in China.

Praying for release: Chip Starnes stands behind a barred window at his Beijing medical supplies factory, after being held hostage for five days. Photo: AFP

Although he explained that the remaining workers were not being laid off, the remaining 100 employees barricaded the exits Friday and stopped him from leaving until he agreed to give them compensation identical to that given to the laid-off employees, a sum he contends would bankrupt the company.

Since then he has been trapped within the factory grounds, occasionally appearing at the barred window of his office, looking haggard and in the same clothes he has worn since Friday. Over the weekend, local officials coerced him into signing contracts that met some of the workers' demands, even as employees kept him awake with bright lights and loud noises.

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In the interview, Mr Starnes bemoaned his fate, saying local officials were pressing him to provide lavish compensation to workers who were not scheduled to be laid off. "The union just wants to do anything that will calm the people," he said. "They are asking me to commit business suicide."

Workers paint a starkly different picture of a company that has not paid its employees in weeks as news spread that Specialty Medical was relocating some operations to India. "We have been given an IOU for two months and all assembly lines have stopped," said one manager, who would only give his surname, Wang. "We went without work. What were we going to do?"

Gao Ping, a worker in the alcohol prep pads division, leaves a room after speaking to journalists inside the Specialty Medical Supplies plant, where American Chip Starnes is being held hostage. Photo: AP

Mr Starnes rejected the accusations of unpaid wages. "That's ridiculous," he said, citing the payroll schedule. "They were all paid on Monday." The factory was producing goods until the workers went rogue, he added.

China often favors economic development over labour rights, leaving workers with little recourse to resolve salary disputes. Sometimes, those who feel cheated turn to intimidation or violence.

Flags belonging to the U.S. and China flutter through a closed gate at a factory where Chip Starnes, the co-owner, is being held hostage, on the outskirts of Beijing, June 25, 2013. Photo: Reuters

In February, a factory owner in south China's Guangxi Autonomous Region was kidnapped from a hotel by two contractors who claimed that he owed them $US618,000 ($667,000). A month earlier, a migrant worker in Shandong province stabbed the relatives of a construction contractor, killing the man's 5-year-old nephew, over what media reports said was a $245 debt. In December, 14 women died in a fire at a bra factory in Guangzhou, which the police determined had been set by a worker upset over $490 in unpaid wages.

Western business executives say foreign companies are especially vulnerable to the strong-arm tactics of employees who have little faith in the Chinese legal system.

One business executive in Beijing described how workers at his company got wind of an impending closure and took managers hostage even before plans for compensation had been made public.

He said the crisis was defused by the local government, backed by the police.

"It's easy in China to agitate around a foreign employer," said the executive, who asked that his identity and his company's be kept secret because he still does business in China. "This society is accustomed to using tools of mass mobilization, and when a spark erupts in the wrong place, things can quickly get out of control."

Diplomats say they are relatively helpless when a foreign business owner is embroiled in such disputes. Officials from the US Embassy visited Mr Starnes on Monday but could do little more than check on his welfare and make sure that he had access to his lawyers.

In the meantime, Mr Starnes is unsure how the dispute can be resolved in a way that convinces his employees to come back to work. "They hear a rumor and there's a big payday possibly, they'll stick together," he said.